For you to get the best deal when buying a new car, you have to be comfortable with the process of haggling and negotiating with dealers. Sometimes this will include negotiating the terms of an extended warranty on the vehicle.
Dealing with car repairs can be a difficult and daunting task for many, which is why some people choose to purchase an extended car warranty, also known as a service contract. An extended car warranty is an insurance policy on your vehicle, and it acts as a safeguard against expensive, unforeseen repair costs.
During the whole car buying experience, you may ask yourself, Can I cancel my extended warranty? The answer is yes. You can cancel your extended warranty in most cases as long as you comply with the terms and conditions set forth in your contract.
What happens if the dealer refuses to pay you the money back that you paid for the extended warranty? These and some other questions are going to be answered throughout the rest of this post. Keep reading to get all the information that you need to know about extended warranties and canceling them.
How do extended warranties work?
A car’s extended warranty is an insurance policy on your vehicle, and it acts as a safeguard against expensive, unforeseen repairs. An extended warranty is not required by law, but it is offered by carmakers and dealers as an extra purchase for customers.
Extended warranties cover repairs and replacements on specific parts of your car. The coverage varies depending on the plan you choose and the dealership. Some common coverage areas include the engine, transmission, air conditioning, and electrical system.
There is also what is called a “bumper to bumper warranty” that covers just about everything on the car except for normal wear-and-tear items like brakes and tires. This type of warranty will cover parts between the front and rear bumper of your vehicle, but it will exclude maintenance items.
Routine maintenance and minor repairs are not covered under an extended warranty. This includes things like oil changes, tune-ups, and tire rotations.
Can you cancel an extended warranty after purchase?
Reading the fine print before signing the dotted line is always a good idea. And in the case of an extended warranty, it’s even more important. That’s because your service provider may have a strict cancellation policy that includes penalties and fees.
You can cancel an extended car warranty as long as you comply with the terms and conditions set forth in your contract. Some companies may require a cancellation fee, while others may allow you to cancel without penalty.
It’s important to read over your extended warranty contract carefully before signing so that you understand the terms and conditions of canceling. Some warranty companies also offer a money-back guarantee or trial period, so be sure to ask about these options as well.
Are extended warranties worth the cost?
If you plan to keep your vehicle for a long time, extended car warranties may be worth the cost. That’s because they can help you avoid expensive repair costs down the road.
However, if you plan to trade in your used car or sell it a few years later, an extended warranty may not be the best option for you. Getting vehicle service contracts at this point will become an expensive gamble, as you’ll be paying for coverage on a car that you will be selling shortly.
With the manufacturer’s warranty and a good car insurance policy, you may already have enough coverage. Before purchasing an extended car warranty, do your research and compare the costs and coverage to see if it’s right for the situation.
How do I get out of an extended car warranty?
Most dealerships will allow you to apply for a cancellation request via a custom cancellation form. However, the cancellation process can vary depending on the company that you purchased your warranty from.
When you call the warranty providers customer care department to cancel your service, be sure to have your contract information ready. The representative will likely ask for your contract number, the date of purchase, and other identifying information.
If you just purchased a new car and you traded in the vehicle that has the warranty coverage, you will need a purchase order that includes the following:
- Name, address, and date
- Proof of no lien
- VIN number of the trade
- Mileage on the odometer
Some car owners go above and beyond, and they write a note to the dealership with a brief review of their cancellation. This will help the finance manager accelerate the extended auto warranty cancellation.
You could state the reasons for why you’re canceling and how the dealership could have improved upon their service. The entire process shouldn’t take more than a few weeks from start to finish unless the dealer refuses your request or if you do not submit the proper documentation.
Additionally, you will need to follow up with the accounting department a few days after you speak to the finance manager to make sure that the extended warranty has been canceled, and you will no longer be responsible for monthly payments.
Can a dealer refuse to cancel extended warranty?
In most situations, a dealer will refuse to cancel an extended warranty if you do so after the cut-off point. A warranty provider frequently puts a condition in the agreement requiring a tight time period for withdrawing from the warranty plan.
You may be able to cancel these types of warranties directly with the dealership if you do so within the first 30 days of signing the original contract. This is a fantastic alternative since you may lower the total auto loan balance by this amount, saving money in the long term.
Some dealerships will allow you to cancel an extended warranty after the initial 30 days, but they may charge a fee for doing so. Because of these high cancellation fees, you should thoroughly research any contracts before signing them.
Why should you never buy an extended car warranty?
Consumer Reports said that the median cost of mechanical breakdown insurance or warranty is in the range of $1,500 to $2,500. This extra cost will be added to your total loan amount, and you will be paying monthly installments on it for the entire length of your loan.
In most cases, the coverage offered by the manufacturer’s warranty is enough, and you don’t need to buy an extended car warranty. If you still want to get it, make sure you speak to the financial institution or dealership that is providing your loan to see if they offer this product.
It is something to consider during your car buying experience if you plan to put a lot of miles into your vehicle. Once a vehicle passes over 100k miles, the chance of a mechanical issue greatly increases, making an extended warranty more likely to save you money. In this case, it is worth paying for the total cost of the warranty in full upfront.
Can you get a refund for your extended car warranty?
Yes. Most likely, you will get a refund if you cancel your extended warranty. Car dealerships and warranty companies are required by law to offer a refund for any cancellations made within the first 30 days. However, you may not receive a full refund if you cancel after this period.
When you cancel after the grace period, you will receive a prorated refund. This means that you will be refunded a portion of the cost based on how long you have had the warranty. The Carshield warranty company will calculate the prorated amount of the refund using the length of time remaining on the warranty and the price you paid.
What is the difference between a service contract and an extended warranty?
A service contract is a contract between you and a third-party provider that outlines the services that will be performed on your vehicle. An extended warranty is a type of insurance provided by the auto manufacturer or car dealership.
What should I consider before buying extended warranties?
Before purchasing an extended warranty, there are a few things to think about, such as:
- The cost of the plan
- Length of coverage
- What is and is not covered under the plan
- The deductibles and down payment
- The claims process
If you have a vehicle that is still under the manufacturer’s warranty, you may not need an extended warranty since repairs should be covered during this time. You should also consider whether you are likely to keep the car long enough to use the extended warranty, as it typically only covers cars for a few years.